United Airlines is investing in its product in the air and on the ground as it rapidly rebuilds its domestic and international networks. Mark Pilling reports
United Airlines Chief Executive Scott Kirby is confident his airline is poised for robust growth and profits, while maintaining strong operational integrity, after making the right calls back in early 2020 when the pandemic started.
Speaking at the airline’s full-year results presentation in January, he pointed to its unique ability to regrow its international network as a big win. “This is one of the most stark examples of what United did differently than our competitors,” said Kirby.
“Over the pandemic, we bet international [demand] would return strong post pandemic and because we were the only airline around the world with that view of the recovery, we were also the only airline to make two important strategic decisions: we didn’t retire widebody aircraft, and we were the only airline in the world that negotiated a deal with our pilot union to keep pilots in place and in position.
“That allowed us to quickly bounce back,” he explained. “The decisions that our competitors around the globe made to retire aircraft and downgrade pilots take years to reverse. And because of that they simply can’t grow.”
International demand
“As we think about the revenue outlook for 2023 we are bullish about global long haul,” said Andrew Nocella, United’s Executive Vice-President and Chief Commercial Officer. “International demand remains incredibly strong and we’re looking at the potential for record profits and margins across our global network.
“Asia has traditionally been a margin drag on our global flying,” said Nocella. “But we’ve worked diligently to rebuild the network and close this gap. Asia is also close to being fully opened, allowing United to re-establish the bulk of its Pacific flying outside of China.
“It’s worth noting that restrictions on the use of Russian airspace will constrain United from flying the bulk of our China network in 2023,” Nocella continued. “This same restriction will also limit our ability to fly to India.”
In its domestic North American network United sees a favourable supply and demand environment this year. “United is quickly executing on plans for gauge, premium seating, revenue segmentation, signature interiors and most importantly restoring and building connectivity which suffered during the pandemic,” said Nocella.
“We’re opening 17 new mainline gates in [New York] Newark, and 20 in Denver in 2023, which will enhance our customer experience and improve reliability,” explained Nocella. “In Denver the new gates will allow us to grow our most profitable hub and in Newark they will allow us to transition more flights to Mainline from Express, consistent with our United Next plans.”
Aircraft deliveries
United’s access to a plentiful stream of new aircraft is a big advantage. “Our aircraft order book is one of our key assets as it provides us with both cost-saving replacement aircraft and the ability to take advantage of profit-enhancing growth opportunity,” said Gerald Laderman, Executive Vice-President and Chief Financial Officer. “Because of the flexibility built into the order book we can also adjust the delivery timeline as the macro economy dictates.”
The carrier expects to take delivery of 92 Boeing 737 Max aircraft, two 787s and four Airbus A321s in 2023. In December 2022 it announced one of its largest ever orders which included 100 firm 787s, which will address much of its widebody replacement needs to 2032.
In addition, it placed options on a further 100 787s “that can be used for growth if there are margin or creative opportunities to do so”, said Laderman. United also ordered 100 more 737 Max aircraft to meet the airline’s next route targets and start preparing for narrowbody replacements in 2027 and beyond.
